Business Monday: Judgment puts cattle operation in the red
The company that manages ranches and raises the cattle for its sister operation, Carbondale-based Crystal River Meats, has declared bankruptcy in the wake of two disputed court judgments totaling more than $2.5 million.
JBC Agricultural Management LLC, owned by the Jacober family, who also run Crystal River Meats, purportedly the largest producer of grass-fed beef and lamb in Colorado, will continue to operate through the Chapter 11 process, which will allow it to devise a plan to reorganize its debts, said Tai Jacober, the CEO of both companies, last week.
“I think that it’s important for consumers to know that it’s a challenging industry, where you try to do things right, and it clearly comes back to bite you sometimes,” he said.
Jacober was referring to a legal dispute with Southern Cross Ranches out of Windsor, which won a court’s summary judgment of $2.1 million and Ranch Management LLC, which won a $428,175 judgment. A Weld County judge issued both judgments in December, with the creditors recently pursuing garnishments, according to court records.
Jacober said his company plans to fight both judgments through the appellate process, “but they (the creditors) can still act on their judgment, so the only way to protect a stay from the judgment is to put it into Chapter 11.”
The disputes stem from JBC’s backing out of a purchase of some 3,100 calves from the plaintiffs, Jacober said. When it was time to close the deal, Jacober said his company didn’t like what it was getting.
“We refused to buy the cattle because they didn’t qualify for our certification level,” Jacober said. “They can’t come from feed lots and they have to be grass-fed. … When we went to pick up the cattle, they were belly-deep in a feed lot, being fed corn, so we refused to buy the cattle.”
He added, “It was not our intention to walk away from this deal.”
JBC’s bankruptcy petition lists its assets between $1 million and $10 million, with its liabilities between $10 million and $50 million. It also has filed a motion to retain the legal services of the Denver firm Kutner Brinen PC during the bankruptcy proceedings, according to court papers. The firm’s retainer fee was $21,238, but legal fees may exceed that, court documents say.
“The debtor and counsel expect that a substantial amount of time will be required by counsel in order to properly address the issues facing the debtor,” states a motion that’s part of JBC’s Chapter 11 file in the U.S. Bankruptcy Court in Denver. “The issues facing the debtor are complex and involve significant sums of money. It is in the best interests of the debtor and the estate to have bankruptcy counsel that counsel be provided with a reasonable retainer.”
JBC runs and manages ranches throughout the West and Southwest, including in the San Luis Valley in Colorado as well as Nevada and New Mexico. Crystal River Meats, the wholesale meats division of the Jacober family business, began with a small operation in 1999 whose products are currently sold at the Whole Foods at Willits and restaurants owned by Aspen Skiing Co., among others. Crystal River Meats’ products also are sold by such distributors as Seattle Fish Co. The Jacober family also owns Fatbelly Burgers in Carbondale.
Jacober said customers won’t notice a difference with the products because of the bankruptcy, but it will be felt internally.
“It will mean more work, but in terms of what the consumers will see, it won’t affect anything,” he said. “We’ll continue to do business as normal, but the restructuring takes a huge amount of paperwork, plus money.”
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